Tuesday, April 25, 2006

That pesky oil addiction II

This report out of California is interesting.

SACRAMENTO — As the statewide average price for regular gasoline passed $3 a gallon Monday, politicians and grass-roots activists pumped up their calls for new taxes on companies that produce or refine oil in California.

"We must not rule out the possibility of market manipulation, price gouging or unfair business practices employed by oil companies," Schwarzenegger said.

Also Monday, the chairman of the Assembly Revenue and Taxation Committee won a first vote on his latest proposal to slap a 2% surtax on so-called windfall profits from petroleum producing, refining and sales activities.

The bill garnered the minimum four votes needed to move to its next committee.

"It's time we made these companies pay," said Assemblyman Johan Klehs (D-San Leandro), the bill's author. "They can avoid paying the tax by reducing their prices for gasoline."

Klehs' proposal, an outgrowth of a bill defeated on the Assembly floor in January, would earmark proceeds to provide tax credits to middle- and lowincome seniors to buy prescription drugs. He estimates that the tax could amount to as much as $190 million annually.

The new bill has won the endorsement of Assembly Speaker Fabian Nuñez (D-Los Angeles). Nuñez said Monday that he was considering sponsoring his own windfall profit tax on oil company earnings in California.

"We believe oil companies are ripping us off and artificially inflating the price of gas at the pump," Nuñez said. "The 120 legislators in Sacramento ought to be as outraged as the 14 million motorists in California," he said, referring to members of the Assembly and the Senate.

Prices at the pump set a new record in California on Monday, after rising more than 17 cents in the last week, to an average of $3.068 for a gallon of regular, according to the latest figures from the U.S. Department of Energy.

Citing surging prices across the country, House Speaker J. Dennis J. Hastert (R-Ill.) and Senate Majority Leader Bill Frist (R-Tenn.) wrote Monday to President Bush, requesting that he order the Federal Trade Commission and the attorney general to investigate oil company profits and executive pay, as well as the factors behind tight gasoline supplies.

Rep. Joe L. Barton (R-Texas) called for a similar probe by the House Oversight and Investigations Subcommittee.

Oil industry representatives expressed confidence that any new federal or state investigation would reveal no evidence of market manipulation.

"There have been 30 investigations in the last 20 years. In not one case has there been any evidence of wrongdoing," said Joe Sparano, president of the Western States Petroleum Assn.

He said gasoline prices were especially high in California because of a precarious balance between supply and demand. The state is served by only 14 refineries, compared with 32 in 1980.

At the same time, U.S. crude oil production has plummeted to 5 million barrels a day last year from 10 million in the 1980s, increasing the country's dependence on supplies imported from often politically unstable foreign countries, Sparano said. California currently produces about 773,000 barrels a day of crude oil. [Marc Lifsher, Los Angeles Times]

So here we have a story that reports that US oil production has fallen, imports are up and refineries have shut down. What about California’s 7.25% state & county sales tax that taxes people more as fuel prices rise? What about the weak US dollar that makes imports more expensive? Why is the FTC brought in to put oil companies--the actual people who produce fuel--under the lens when the government’s own misguided policies don’t even merit a cursory glance?

Why? Because businessmen are the easy villain in our culture. Self-interest is immoral and any-self-interested act is immediately suspect, while any altruistic act is immediately forgiven—even despite altruism being the source of the problem in the first place. It is altruism that causes high tax rates by giving government the moral case for massive spending and redistribution of wealth. It is altruism that blocks new energy production on the grounds that oil drilling despoils nature and nature must come first—even at the price of human suffering. And it is altruism that gives government license to threaten producers while ignoring the fact that without them, there would be no oil in the first place.